COMMERCIAL LEASE AGREEMENT
This Commercial Lease Agreement ("Lease") is made March __, 2003, by and between
ALEX PROPERTIES, a California general partnership ("Landlord"), and I/OMAGIC
CORPORATION, a Nevada Corporation ("Tenant").
WHEREAS, Landlord is the owner of land and buildings thereon commonly known and
numbered as 1300 Xxxxxxx, Xxxxx Xxx, 00000, located in the County of Orange,
State of California ("Leased Premises").
WHEREAS, Landlord desires to lease the Leased Premises to Tenant, and Tenant
desires to lease the Leased Premises from Landlord for the Term (as hereinafter
defined), at the rental and upon the covenants, conditions and provisions herein
set forth.
NOW, THEREFORE, in consideration of the mutual promises herein, contained and
other good and valuable consideration, it is agreed:
1. TERM.
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The term of this Lease ("Term") shall commence on the effective date as defined
in paragraph 23.(2) of that certain Settlement Agreement and Release by and
among Landlord, Tenant, IOM Holdings, Inc., and other parties referenced therein
("Commencement Date") and end on September 30, 2003 ("Expiration Date"), unless
sooner terminated as provided herein. Upon the Commencement Date, the existing
Commercial Lease Agreement dated April 1, 2000 by and between Landlord and
Tenant's related entity, IOM Holdings, Inc., a Nevada corporation, as modified
by that certain Amendment to Lease Agreement dated June 1, 2000 (the "Previous
Lease"), shall automatically terminate and be of no further force or effect.
Notwithstanding the foregoing, Tenant may terminate this Lease prior to the
Expiration Date upon twenty (20) days prior written notice to Landlord; provided
however that in no event shall the effective date of such termination occur
earlier than June 30, 2003.
2. RENT.
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Tenant shall pay to Landlord during the Term rent of $28,687.00 per month,
payable on the first day of each month. The rent for the month of the
Commencement Date shall equal $956.00 multiplied by the number of days from the
Commencement Date to the end of said month, and shall be payable the
Commencement Date. The rent for any subsequent months in the Lease Term shall
be payable on the first day of each month. If Tenant exercises its right
(pursuant to paragraph 1 above) to terminate this Lease prior to September 30,
2003, Landlord shall refund to Tenant rent for the month of termination in an
amount equal to $956.00 multiplied by the number of days from the termination
date to the end of said month of termination. In no event shall Tenant be
responsible for the payment of any rent after such termination date.
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3. USE.
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The Leased Premises may be used and occupied by Tenant for any lawful purpose
which complies with applicable zoning ordinances. Notwithstanding the
foregoing, Tenant shall not use the Leased Premises for the purposes of storing,
manufacturing or selling any explosives, flammables or other inherently
dangerous substance, chemical, thing or devise.
4. SUBLEASE AND ASSIGNMENT.
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Tenant shall not voluntarily or by operation of law assign, transfer, mortgage,
encumber or sublet all or any part of Tenant's interest in this Lease or in the
Leased Premises without Landlord's prior written consent.
5. REPAIRS.
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During the Term, Landlord shall, at Landlord's sole expense, keep the Leased
Premises in good order, condition and repair (whether or not the need for such
repairs occurs as a result of Tenant's use, any prior use, the elements or the
age of such portion of the Leased Premises), but only to the extent necessary to
allow for the continued operation of Tenant's business at the Leased Premises in
the same manner as it has been operated under the Previous Lease. The parties
understand and agree that Tenant and IOM Holdings, Inc. (the predecessor lessee
under the Previous Lease), as well as each of their officers, directors,
employees, agents and representatives, shall not have any obligations to make or
pay for any repairs, alterations, or improvements to all or any part of the
Leased Premises during the Lease Term or at any other time, and, except as
specifically provided for in this Lease, shall not have any obligations to pay
for any expenses relating to the Leased Premises. The parties understand and
agree that, prior to the Commencement Date and the execution of this Lease,
Tenant had previously contracted for certain improvements, alterations and/or
repairs to the Leased Premises that have not yet been paid for, and which are
set forth in Exhibit A attached hereto. The items listed on Exhibit A hereto
which have not yet been paid for shall be the sole responsibility of Landlord,
who shall pay for such items in a timely manner pursuant to the terms of the
contracts included in Exhibit A hereto. Prior to the Commencement Date and
execution of this Lease, Landlord had made requests to its lender Bank of
America ("BofA") for reimbursements from a BofA reserve account of certain
repairs and/or improvements to the Leased Premises, which requests are
summarized in Exhibit B hereto (and which include the items listed on Exhibit A
hereto). In the event any such reimbursements are made by BofA for any of the
items listed on Exhibit B hereto, Landlord shall have the right to retain and
shall retain all such reimbursements.
6. TENANT PROPERTY; SURRENDER.
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A. All non-permanent fixtures of any type or nature (including but not
limited to bolted pallet rack systems, any other equipment or machinery bolted
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or affixed to any part of the Leased Premises, chain link fences, signage,
security cameras or any other non-permanent fixtures located anywhere in or at
the Leased Premises) and all equipment or property of any type or nature
(including but not limited to any machinery, mobile or non-mobile equipment,
assembly line equipment, shrink wrap machines, phone lines (except for internal
wiring contained within the walls of the buildings), phone systems, phone
equipment, computers, computer lines (except for internal wiring contained
within the walls of the buildings), computer systems, time clocks, electronic
white boards, trash compactors, warehouse rack equipment, furniture, storage
containers, trash containers, and work stations/benches located anywhere in or
at the Leased Premises) which were present at the Leased Premises on or before
the Commencement Date or which are placed or installed at the Leased Premises by
Tenant at any time thereafter, are all the property of Tenant, and Landlord
shall have no right, title or interest in or to same. Upon its surrender of the
Leased Premises, Tenant may remove all of the above-mentioned property from the
Leased Premises.
B. Tenant shall surrender the Leased Premises by the Expiration Date or any
earlier termination date as provided herein, in "As-Is" condition, except that,
upon surrender of the Leased Premises: (a) the Leased Premises shall be swept
clean of debris by Tenant, and (b) Tenant shall not create any holes in the
walls of the buildings at the Leased Premises as a result of Tenant's removal of
Tenant's property described in paragraph 6.A. above.
C. Tenant shall reimburse Landlord for and indemnify Landlord against all
damages incurred by Landlord as a result of Tenant's delay in vacating the
Leased Premises. If Tenant remains in possession of the Leased Premises or any
part thereof after the Expiration Date or earlier termination of this Lease with
or without the consent of Landlord, then: (a) such occupancy shall be a tenancy
from month-to-month only and not a renewal of this Lease; (b) the rent shall be
increased to 200% of the rent in effect during the last month of the Lease Term;
and (c) such tenancy shall be terminable on thirty (30) days notice given at any
time by either party.
7. PROPERTY TAXES.
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Landlord shall pay, prior to delinquency, all general real estate taxes and
installments of special assessments coming due during the Term on the Leased
Premises, and all personal property taxes with respect to Landlord's personal
property, if any, on the Leased Premises. Tenant shall be responsible for paying
all personal property taxes with respect to Tenant's personal property at the
Leased Premises.
8. INSURANCE.
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A. Landlord shall maintain fire and extended coverage insurance on the
Leased Premises in such amounts as Landlord shall deem appropriate. Tenant
shall be responsible, at its expense, for fire and extended coverage insurance
on all of its personal property, including removable trade fixtures, located on
the Leased Premises.
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B. Tenant shall maintain a policy or policies of comprehensive general
liability insurance with respect to its activities on the Leased Premises with
the premiums thereon fully paid on or before due date, such insurance to afford
minimum protection of not less than $1,000,000 combined single limit coverage of
bodily injury, property damage or combination thereof.
9. UTILITIES.
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Tenant shall pay all charges for water, sewer, gas, electricity, telephone and
other services and utilities used by Tenant on the Leased Premises during the
Term unless otherwise expressly agreed in writing by Landlord. In the event that
any utility or service provided to the Leased Premises is not separately
metered, Landlord shall pay the amount due and separately invoice Tenant for
Tenant's pro rata share of the charges. Tenant shall pay such amounts within
fifteen (15) days of invoice. Tenant acknowledges that the Leased Premises are
designed to provide standard office use electrical facilities and standard
office lighting. Tenant shall not use any equipment or devices that utilizes
excessive electrical energy or which may, in Landlord's reasonable opinion,
overload the wiring or interfere with electrical services to other tenants.
10. SIGNS.
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Tenant shall have the right to place on the Leased Premises, at locations
selected by Tenant, any signs which are permitted by applicable zoning
ordinances and private restrictions.
11. ENTRY.
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Landlord's agent, as approved and agreed upon by Tenant, shall have the right to
enter upon the Leased Premises at reasonable hours to show the Leased Premises
for purposes of marketing the Leased Premises for potential future sale upon
providing Tenant with one (1) day prior written notice, provided that Landlord
shall not thereby unreasonably interfere with Tenant's business on the Leased
Premises.
12. PARKING.
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During the Term, Tenant shall have the exclusive use of all non-reserved and
reserved common automobile parking areas, driveways, and footways.
13. DAMAGE AND DESTRUCTION.
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Subject to Section 8A above, if during the Term the Leased Premises or any part
thereof or any appurtenances thereto is so damaged by fire, casualty or
structural defects that the same cannot be used for Tenant's purposes, then
Tenant shall have the right within fifteen (15) days following damage to elect
by notice to Landlord to terminate this Lease as of the date of such damage. In
the event of minor damage to any part of the Leased Premises, and if such damage
does not render the Leased Premises unusable for Tenant's purposes, Landlord
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shall promptly repair such damage at the cost of the Landlord. In making the
repairs called for in this section, Landlord shall not be liable for any delays
resulting from strikes, governmental restrictions, inability to obtain necessary
materials or labor or other matters which are beyond the reasonable control of
Landlord. Tenant shall be relieved from paying rent and other charges during any
portion of the Term that the Leased Premises are inoperable or unfit for
occupancy, or use, in whole or in part, for Tenant's purposes. Rentals and other
charges paid in advance for any such periods shall be credited on the next
ensuing payments, if any, but if no further payments are to be made, any such
advance payments shall be refunded to Tenant. The provisions of this section
extend not only to the matters aforesaid, but also to any occurrence which is
beyond Tenant's reasonable control and which renders the Leased Premises, or any
appurtenance thereto, inoperable or unfit for occupancy or use, in whole of in
part, for Tenant's purposes.
14. DEFAULT.
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A. If default shall at any time be made by Tenant in the payment of rent
when due to Landlord as herein provided, and if said default shall continue for
fifteen (15) days after written notice thereof shall have been given to Tenant
by Landlord, or if default shall be made in any of the other covenants or
conditions to be kept, observed and performed by Tenant, and such default shall
continue for thirty (30) days after notice thereof in writing to Tenant by
Landlord without correction thereof then having been commenced and thereafter
diligently prosecuted, Landlord may declare the Term ended and terminated by
giving Tenant written notice of such intention, and if possession of the Leased
Premises is not surrendered, Landlord may reenter said premises.
B. Landlord shall have, in addition to the remedy above provided, any other
right of remedy available to Landlord on account of any Tenant default, either
in law or equity. Landlord shall use reasonable efforts to mitigate its
damages.
15. QUIET POSSESSION.
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Landlord covenants and warrants that upon performance by Tenant of its
obligations hereunder, Landlord will keep and maintain Tenant in exclusive,
quiet, peaceable and undisturbed and uninterrupted possession of the Leased
Premises during the Term.
16. CONDEMNATION.
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If any legally, constituted authority condemns the Leased Premises or such part
thereof which shall make the Leased Premises unsuitable for leasing, this Lease
shall cease when the public authority takes possession, and Landlord and Tenant
shall account for rental as of that date. Such termination shall be without
prejudice to the rights of either party to recover compensation from the
condemning authority for any loss or damage caused by the condemnation. Neither
party shall have any rights in or to any award made to the other by the
condemning authority.
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17. SUBORDINATION.
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Tenant accepts this Lease subject and subordinate to any mortgage, deed of trust
or other lien presently existing or hereafter arising upon the Leased Premises,
or upon the building and to any renewals, refinancing and extensions thereof,
but Tenant agrees that any such mortgagee shall have the right at any time to
subordinate such mortgage, deed of trust or other lien to this Lease on such
terms and subject to such conditions as such mortgagee may deem appropriate in
its discretion. Landlord is hereby irrevocably vested with full power and
authority to subordinate this Lease to any mortgage, deed of trust or other lien
now existing or hereafter placed upon the Leased Premises, and Tenant agrees
upon demand to execute such further instruments subordinating this Lease or
attorning to the holder of any such liens as Landlord may request. In the event
that Tenant should fail to execute any instrument of subordination herein
required to be executed by Tenant promptly as requested, Tenant hereby
irrevocably constitutes Landlord as its attorney-in-fact to execute such
instrument in Tenant's name, place and stead, it being agreed that such power is
one coupled with an interest. Tenant agrees that it will from time to time upon
request by Landlord execute and deliver to such persons as Landlord shall
request a statement in recordable form certifying that this Lease is unmodified
and in full force and effect (or if there have been modifications, that the same
is in full force and effect as so modified), stating the dates to which rent and
other charges payable under this Lease haven been paid, stating that Landlord is
not in default hereunder (or if Tenant alleges a default stating the nature of
such alleged default) and further stating such other matters as Landlord shall
reasonably require.
18. INDEMNIFICATION OF LANDLORD.
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Tenant shall hold harmless, indemnify, and defend Landlord, and its agents, with
counsel reasonably satisfactory to Landlord (and Landlord agrees to accept
counsel that any insurer requires be used), from all liability, penalties,
losses, damages, costs, expenses, causes of action, claims, and/or judgments
arising by reason of any third party's death, bodily injury, or personal injury
resulting from and to the extent caused by the negligence or willful misconduct
of Tenant or its agents in their activities at the Leased Premises during the
Lease Term.
19. INDEMNIFICATION OF TENANT.
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Landlord shall hold harmless, indemnify, and defend Tenant and its agents, with
counsel reasonably satisfactory to Tenant (and Tenant agrees to accept counsel
that any insurer requires be used), from all liability, penalties, losses,
damages, costs, expenses, causes of action, claims, and/or judgments arising by
reason of any third party's death, bodily injury, or personal injury resulting
from and to the extent caused by the negligence or willful misconduct of
Landlord or its agents in their activities at the Leased Premises during the
Lease Term.
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20. ESTOPPEL CERTIFICATES.
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At all times during the Lease Term, each party agrees, following any request by
the other party, promptly to execute and deliver to the requesting party within
ten (10) days following delivery of such request an estoppel certificate: (1)
certifying that this Lease is unmodified and in full force and effect or, if
modified, stating the nature of such modification and certifying that this
Lease, as so modified, is in full force and effect; (2) stating the date to
which the rent and other charges are paid in advance, if any; (3) acknowledging
that there are not, to the certifying party's knowledge, any uncured defaults on
the part of any party hereunder or, if there are uncured defaults, specifying
the nature of such defaults; and (4) certifying such other information about the
Lease as may be reasonably required by the requesting party.
21. ATTORNEYS' FEES.
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In the event either Landlord or Tenant shall bring any action or legal
proceeding for an alleged breach of any provision of this Lease, to recover
rent, to terminate this Lease, or otherwise to enforce, protect, or establish
any term or covenant of this Lease, the prevailing party shall be entitled to
recover as part of such action or proceeding, or in a separate action brought
for that purpose, reasonable attorneys' fees, court costs, and experts' fees as
may be fixed by the court, including matters on appeal.
22. LATE CHARGE; INTEREST.
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Tenant acknowledges that the late payment of rent by Tenant to Landlord
hereunder will cause Landlord to incur administrative costs and other damages,
the exact amount of which would be impracticable or extremely difficult to
ascertain. Landlord and Tenant agree that if Landlord does not receive any such
payment on or before five (5) days after the date the payment is due, Tenant
shall pay to Landlord, as additional rent, (a) a late charge equal to five
percent (5%) of the overdue amount to cover such additional administrative costs
and other damages; and (b) interest on the delinquent amounts at the less of the
maximum rate permitted by law if any or twelve percent (12%) per annum from the
date due to the date paid.
23. DISHONORED CHECKS.
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If any of Tenant's checks for payment of rent are dishonored for any reason,
Tenant shall pay Landlord a service charge of $25.00 for each dishonored check
in addition to repayment of the dishonored check. If two (2) or more of Tenant's
checks are dishonored, Landlord may require, during the balance of Tenant's
tenancy, that all payments due be made by cashier's check or money order.
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24. NOTICE.
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Any notice required or permitted under this Lease shall be deemed sufficiently
given or served if sent by postage prepaid United States first class mail, as
well as concurrently by facsimile, to the following addresses and fax numbers:
If to Landlord to:
Alex Properties
00 Xxxxxxx
Xxxxxx, XX 00000
Fax No.: (000) 000-0000
with a copy of same sent to:
Xxxxxxx Huron, Esq.
Huron Law Group
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000
Fax No.: (000) 000-0000
If to Tenant to:
I/OMagic Corporation
c/o Xxxx Xxxxxxx
0000 Xxxxxxx Xxxxxx
Xxxxx Xxx, XX 00000
Fax No.: (000) 000-0000
with a copy of same sent to:
Xxxx X. Xxxxxxxx, Esq.
Cameron, Pearlson & Xxxxxx
Xxx Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, XX 00000
Fax No.: (000) 000-0000
Landlord and Tenant shall each have the right from time to time to change the
place notice is to be given under this paragraph by written notice thereof to
the other party.
25. BROKERS.
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Tenant represents that Tenant was not shown the Leased Premises by any real
estate broker or agent and that Tenant has not otherwise engaged in, any
activity which would form the basis for a claim for real estate commission,
brokerage fee, finder's fee or other similar charge, in connection with this
Lease.
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26. WAIVER.
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No waiver of any default of Landlord or Tenant hereunder shall be implied from
any omission to take any action or account of such default if such default
persists or is repeated, and no express waiver shall affect any default other
than the default specified in the express waiver and that only for the time and
to the extent therein stated. One or more waivers by Landlord or Tenant shall
not be construed as a waiver of a subsequent breach of the same covenant, term
or condition.
27. MEMORANDUM OF LEASE.
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The parties hereto contemplate that this Lease should not and shall not be filed
for record, but in lieu thereof, at the request of either party, Landlord and
Tenant shall execute a Memorandum of Lease to be recorded for the purposes of
giving record notice of the appropriate provisions of this Lease.
28. HEADINGS.
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The headings used in this Lease are for convenience of the parties only and
shall not be considered in interpreting the meaning of any provision of this
Lease.
29. SUCCESSORS.
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The provisions of this Lease shall extend to and be binding upon Landlord and
its legal representatives, successors and assigns.
30. CONSENT.
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Landlord shall not unreasonably withhold or delay its consent with respect to
any matter for which Landlord's consent is required or desirable under this
Lease.
31. PERFORMANCE.
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If there is a default with respect to any of Landlord's covenants, warranties or
representations under this Lease, and if the default continues more than fifteen
(15) days after notice in writing from Tenant to Landlord specifying the
default, Tenant may, at its option and without affecting any other remedy
hereunder, cure such default and deduct the cost thereof from the next accruing
installment or installments of rent payable hereunder until Tenant shall have
fully reimbursed for such expenditures, together with interest thereon at a rate
equal to the lesser of twelve percent (12%) per annum or the then highest lawful
rate. If this Lease terminates prior to Tenant's receiving full reimbursement,
Landlord shall pay the unreimbursed balance plus accrued interest to Tenant on
demand.
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32. COMPLIANCE WITH LAW.
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Tenant shall comply with all laws, orders, ordinances and other public
requirements now or hereafter pertaining to Tenant's used of the Leased
Premises. Landlord shall comply with all laws, orders, ordinances and other
public requirements now or thereafter affecting the Leased Premises.
33. PARTIES.
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This Lease is entered into by and between Alex Properties, a California general
partnership, as the Landlord, and I/OMagic Corporation, a Nevada corporation, as
the Tenant. The parties hereby agree and acknowledge that the officers and
directors of I/OMagic Corporation shall not, in any event, be held individually
responsible for any payments or obligations of Tenant under the terms of this
Lease.
34. FINAL AGREEMENT.
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This agreement terminates and supersedes all prior understanding or agreements
on the subject matter hereof. Only by a further writing that is duly executed
by both parties may modify this Agreement.
IN WITNESS WHEREOF, the parties have executed this Lease as of the day and year
first above written.
"LANDLORD" "TENANT"
Alex Properties I/OMagic Corporation
By: /s/ Xxxx Xxxxxx By: /s/ Xxxx Xxxxxxx
Its: /s/ G.P. 3/25/03 Its: President
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EXHIBIT A TO LEASE AGREEMENT
(1) A-1 All American Roofing Co.:
Amount that has not yet been paid: $ 7,047.50, plus any additional costs or
charges necessary to complete work.
(2) Accurate Awning Corporation:
Amount that has not yet been paid: $ 5,025, plus any additional costs
or charges necessary to complete work.
